'Nothing unlawful' about defense pact in chicken antitrust case - U.S. judge

Tyson Chicken Nuggets, owned by Tyson Foods, are seen for sale in Queens, New York, U.S., November 16, 2021. REUTERS/Andrew Kelly
  • Chicago federal court upholds provisions of a "judgment sharing agreement"
  • Plaintiffs' lawyers decry defendants' unlawful coordination

(Reuters) - A Chicago federal judge on Wednesday refused to undo an agreement among certain chicken producers addressing price-fixing liability, saying provisions in the pact did not limit the ability of antitrust plaintiffs' lawyers to pursue and recover damages at trial.

U.S. District Judge Thomas Durkin in a ruling said he found "nothing unlawful" about the agreement signed in 2020 by about a dozen defendants, including Tyson Foods Inc and Pilgrim's Pride Corp. He said the coordination in a judgment sharing deal "provides incentives" for defendants to reach agreements with plaintiffs.

Such agreements establish how defendants, based sometimes on market share, spread out among each other a judgment in favor of a plaintiff. The pact in the broiler chicken litigation set up a plan for how a "settling plaintiff agrees to reduce the dollar amount collectible from non-settling parties."

In upholding the pact, Durkin wrote that "multiple plaintiffs and multiple defendants often agree with their group about a variety of ways to deal with various litigation matters," adding, "This situation is no different.

Dozens of "direct action plaintiffs," companies that filed their own claims and are not participating in parallel class proceedings, pursued the legal challenge to the defense pact.

Lawyers for direct action plaintiffs, including a team from Boies Schiller Flexner, argued the sharing agreement unfairly requires plaintiffs to agree to reduce certain damages against non-settling defendants. The agreement also requires the signatories to share with each other copies of settlement agreements with any plaintiff that might otherwise be confidential.

The plaintiffs described the coordination as a "group boycott" in which no defendant will settle with a plaintiff unless it agrees to the pact's provisions.

Boies Schiller partner Scott Gant, a lawyer for direct-action plaintiffs including Campbell Soup Co, Target Corp and Sysco Corp, told Reuters that the challenged provisions "are illegal and should be deemed unenforceable."

Lawyers for Tyson Foods and Pilgrim's Pride on Thursday did not immediately return messages seeking comment. A representative from Tyson Foods declined to comment, and a representative from Pilgrim's did not immediately respond to a message asking for comment.

Tyson Foods last year agreed to pay $99 million to resolve end-user consumer class claims, and Pilgrim's said it would pay $75.5 million. Trials for direct-action plaintiffs are not expected to begin at least until next year.

The case is In Re Broiler Chicken Antitrust Litigation, U.S. District Court for the Northern District of Illinois, No. 1:16-cv-08637.

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